Change of leadership

1 September 2010 | By Colin Cottell

The demise of former BP chief executive Tony Hayward has highlighted the importance of employers knowing what they are looking for in their senior leaders. Is it the ability to plan strategically and see the big picture, an eye for detail or the political skills to keep investors and the City on board? Had BP identified emotional intelligence and crisis management as key skills for its top executives, Hayward may have avoided his well-publicised PR gaffes, kept his job and the company might have avoided some reputational damage.

However, it would be a mistake to believe that the skill set required of senior executives remains set in stone. As the economy emerges from recession, recruiters report that the type of skills companies are looking for in their top leadership teams is changing.

Keith Meyer, vice chairman and head of global CEO and board practice at CTPartners, says companies have used the last year to reassess core success factors essential for high performance among their senior executives. “Firms are looking for business builders, people who have experience building great teams, and experience of great product delivery,” he says. “They are also looking for someone who can reinvigorate the cultural dimensions of the firm, building something people care about, rather than taking the ’slash and burn’ cost-control approach, and someone who can accelerate cultural change.”

Dan Couzens, senior talent acquisition consultant at Yahoo, says in the changing internet services’ industry there is a need for more strategic leaders - “people who are flexible and adapt to market conditions and new opportunities, yet remain goal oriented,” he says.

However, not all companies are in a growth phase. As Jonathan Flowers, a partner at Veredus explains, in these cash-starved times, public-sector firms are also looking for a new skill set when recruiting leaders. These include the ability to make sense of complexity, to cope with uncertainty and to plan in an uncertain climate. “The ability to work in partnership is critical; it’s not just about managing the company,” he adds.

Following the near-collapse of The Royal Bank of Scotland (RBS) in 2008, the firm has made many changes to its leadership capabilities and the behaviours it looks for in leaders. As Professor David Towner, group head of assessment, RBS Group, says, “In the past, we focused on people who had strong drive and ambition, but while this is important, this is tempered with the need for a more thoughtful approach to how we make business decisions.”

Following a review of its leadership capabilities, RBS chief executive Stephen Hester set out six core comp-etencies for generic senior roles up to executive-board level. Among these is a focus on long-term strategy, rather than short-term objectives, more emphasis on the customer, says Towner.

Within these six clusters, RBS has identified 13 other competencies. Individual roles may also require specific additional competencies, such as the ability to increase market penetration.

Skills required at senior level within organisations are changing in response to economic conditions. So what trends are emerging in how companies assess candidates for these roles?

Tracy Alper, a director at Marks Sattin, says that when assessing candidates for chief financial officer roles, there is much emphasis on “heavy referencing”. “This is both people the candidate worked for and those who worked for the candidate,” she explains. Carried out by Marks Sattin or the client, this often involves half-an-hour interviews with referees, and covers two or three previous roles, says Alper.

Meyer agrees there is more focus on using references to back up claimed competencies, with interviews of up to an hour, with referees not uncommon.

However, Alper warns about over reliance on references. “Just because people recommend someone doesn’t mean they are good. They feel sorry for them a lot of the time.”

James House, managing partner at Redgrave Partners, agrees that more “almost informal” extensive referencing is on the increase. “The corporate market is much smaller than people realise,” he explains. Similarly, there is a trend for clients to want to meet candidates in social settings, for example at informal dinners. For senior-level positions, House says that emotional intelligence and interpersonal skills are vital.

He says there is also more focus on asking for real evidence to back up CVs - for example, on sales increases, growth of the business, and of that person’s involvement in deals.

Flowers adds that for senior appointments the use of role plays is rising. An example would be a 30-minute meeting between the candidate and a potential supplier, with staff from Veredus playing the part of the supplier. “There are some people who are good at interviews and some people who are good at the job, and this helps us differentiate between the two.”

Psychometric testing is used for many senior roles, with companies such as RBS using the Hay Group and YSC to do intelligence tests. Occupational personality questionnaires often based on the original Myers-Briggs model, such as Saville & Holdsworth, continue to be widely used.

Ken Brotherston, group chief executive at Kinsey Allen, says that while such tests provide recruiters with more information about candidates, he is wary of making a decision based solely on the results. “They add to the decision-making process, but they are not the decision-making process,” he says.

Simon Perry, group resourcing manager at the Co-operative Group, says it uses paper-based and online psychometric testing, including numerical and verbal reasoning. “In some cases these can be used as screening tools,” he adds.

Couzens says Yahoo doesn’t use psychometric testing internally, but this is not to say its recruitment business partners don’t. It can be part of putting a profile together, along with academic achievements and experience, he says. These tests can confirm a talent an interviewer may have spotted in a candidate, or in contradicting their initial perception, he adds.

However, Meyer argues that given the shifting climate, the importance of the assessment tools should not be over emphasised. “It’s more the approach than the actual tools,” he says.

According to Meyer, the Fortune 1,000 clients he works with are no longer satisfied with a structured approach that leads to decisions based on a core set of competencies developed over the last few years. “Such an approach doesn’t address questions about how the person is going to improve the client financially or culturally,” he argues. He says their clients have devised a new version of what is required.

For providers of assessment services, this means the ability to tailor the approach to individual organisations, says Meyer. This includes having an understanding of the characteristics of senior executives that lead to success in that company.

“You have to have a good understanding of how a leader can impact the culture, engage and retain staff and grow talent. That’s the real issue: the softer issues are going to be critical,” he says.

You have to have a good understanding of how a leader can impact the culture, engage and retain staff and grow talent. That’s the real issue: the softer issues are going to be critical

Towner agrees that for senior-level appointments, assessment tools must be adapted to the needs of the firm. For example, while RBS has used structured interviews since 2004, these now take into account the new capabilities. “We have given a new form to these interview, so that it supports people to evaluate candidates against those six performance areas.” It also helps ensure there is a consistency in the type of questions and the areas covered, he adds.

While some organisation focus on personality assessment, Towner says that RBS tends not to overplay its importance. “We find that a lot of the traits and behaviours will be identified using the structured-interview approach,” he says.

While some companies use assessment centres, Couzens says that Yahoo doesn’t. “People at that senior level would perhaps be offended. You have to make them feel special because nine times out of 10 they are passive candidates, and you are going after them, rather than them going after you.”

While interviews remain at the core of senior-level assessment, the popularity of assessment tools will continue to ebb and flow, depending on the preferences of individual companies. However, with the cost of getting senior-level appointments wrong so high, the trend is for a more multi-dimensional approach that reduces the risk of simply relying on interviews.

While what Meyer calls “a portfolio approach” looks set to grow in popularity, with organisations having to run just to keep up with the pace of change, establishing what they want those assessment tools to do is just as important as the tools. Or as Towner, puts it: “The core of any assessment process is what you think you need.”

RBS’s six core competencies:
Focus on business performanc
More strategic focus - ability to focus on long-term strategy as opposed to short-term objectives
More focus on the customer - basing a lot of decision and planning on their needs
Risk and control - more transparent and considered decisions
People management - more focus on career progression, and looking to retain staff and grow talent
Personal skills - strong communication skills, strong thinking capability, and the ability to maintain drive and edge

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